July 05, 2025

Commodity Insight: Feeders are the leader

The six weeks after the Fed hiked rates three-quarters of a percentage point on June 15, the largest such hike in 28 years, virtually every commodity market did a nosedive.

But one market held up well — so well, in fact, it posted a seven-year high in recent days.

No other ag market has done so well since the Fed lifted rates. That well-bid commodity is feeder cattle, cash and futures.

And one of the oldest and most reliable of old saws is: Feeders are the leader.

The recent strength with feeder cattle is a bullish omen for what is going to unfold with cattle prices by the end this year, or in the first quarter of 2023 and well beyond.

The feeders are saying loud and clear that a major, historic bull market for cattle is poised to unfold. Consequently, I am as bullish as can be.

But before I get too serious allow me to lighten the mood with a few cow jokes:

Q: What did the mama cow say to the baby cow?

A: It’s pasture bedtime.

Q: Why are cows always broke?

A: Someone’s always milking them dry.

Q: What do you call a sleeping bull?

A: A bulldozer.

Q: Where do cows eat lunch?

A: In the calf-eteria.

Moving forward, my work hints loudly that cattle prices, cash and futures, are headed to new all-time historic highs.

In fact, in terms of profitability and probability, I am as bullish towards cattle as I have ever been since Dec. 14, 1998, when in a column entitled “A Bottom in Cattle,” I wrote the following: “There is no doubt that 1998 has been an exceptionally difficult one for agricultural producers of all kinds. In the past six months alone, hog prices have fallen to a 58-year low and wheat prices to a 21-year low. Cattle, corn and soybean prices fell to levels last seen several years ago.

“The year 1998 has been ugly. But in the absence of crop problems in South America this winter or in the United States this spring or summer, the critter complex has the greatest upside potential of all markets.

“And whatever bull market unfolds in 1999, it will most certainly be led by cattle where prices finally and emotionally bottomed on Dec. 11, 1998.”

What I wrote above comes from my book, “Haunted By Markets.” When I wrote that information in early December 1998, cattle futures were around the $57 level, rallied up to $81 by February 2001, but pulled back to what turned out to be a long-term low of $60 in April 2002.

And from that April low in 2002, cattle futures kept going higher and higher until October 2014, 12 years later when the market came within a blink of hitting $172.

To repeat: The last time I stuck my neck out so far regarding a forecast for significantly higher cattle prices was in late 1998 in a column entitled “A Bottom in Cattle.”

From that date on, cattle prices basically moved higher into the fall of 2014 with only a meager pullback during that historic bull move. The rally with cattle lasted 16 years and the futures market moved from about $57 to $172.

Will history repeat itself? Are the fundamentals for cattle as bullish today as they were back in late 1998 to 2014?

Understand that no two time periods are identical. Also understand that because I made an accurate market forecast in the past that does not mean the one I am making this week will also be spot on. Past performance is not indicative of future performance.

But I believe deeply the cattle market, cash and futures, is positioned to rally to new all-time historic highs sooner than later. I expect cattle prices to move explosively higher.

The supply of cattle available for slaughter is going to dry up faster than most believe. Add to that, the fact that beef demand is at a 30-year high and a strong bull case can be made.

Thus, the odds favor significantly higher prices for cattle, feeder cattle and beef. And, yes, the upward pressure on cattle prices will only intensify as shortages of ground beef looms as a possibility.

Cattle prices are in position to be explosive on the upside similar to what unfolded back in the early December 1998 into the October 2014 time period.

However, if the Fed keeps lifting interest rates to slow the economy and fight inflation, my bullish vision for cattle prices may not come to be. Only time will tell.

But if the cattle are simply “not there,” as my work suggests, how can the Fed keep a cap on prices?

I have been in the futures industry for almost 150 years or so, and when feeders are the leader, it brings a smile to my face and allows my mind to meander with the possibilities that lie ahead. It should do the same for you, as well.

I also hope those corny cow jokes made you smile, as well. If there was ever a time to embrace corny, it is today.